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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. A group of firms that agree not to compete with each other on the basis of price - production - or other competitive dimensions. Cartel members operate as a monopolist to maximize their joint profits






2. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand






3. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand






4. AFC = TFC/Q






5. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power






6. Exists if a producer can produce more of a good than all other producers






7. The total quantity - or total output of a good produced at each quantity of labor employed






8. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC






9. The additional benefit received from the consumption of the next unit of a good or service






10. The proportion of the tax paid by the consumers in the form of a higher price for the taxed good is greater if demand for the good is inelastic and supply is elastic






11. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied






12. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic






13. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0






14. The change in total product resulting from a change in the labor input. MPL = dTPL/dL - or the slope of total product






15. Entry of new firms shifts the cost curves for all firms downward






16. A very diverse market structure characterized by a small number of interdependent large firms - producing a standardized or differentiated product in a market with a barrier to entry






17. Ei = (%dQd good X)/(%d Income)






18. A measure of industry market power. Sum the market share of the four largest firms and a ratio above 40% is a good indicator of oligopoly






19. The difference between total revenue and total explicit costs






20. Production of the combination of goods and services that provides the most net benefit to society. The optimal quantity of a good is achieved when the MB = MC of the next unit and only occurs at one point on the PPF






21. Goods that are both rival and excludable. Only one person can consume the good at a time and consumers who do not pay for the good are excluded from consumption






22. The sum of consumer surplus and producer surplus






23. Ed < 1






24. Production inputs that cannot be changed in the short run. Usually this is the plant size or capital






25. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability






26. The lost net benefit to society caused by a movement away from the competitive market equilibrium






27. All firms maximize profit by producing where MR = MC






28. ATC = TC/Q = AFC + AVC






29. When firms focus their resources on production of goods for which they have comparative advantage






30. Two goods are consumer substitutes if they provide essentially the same utility to consumers






31. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price






32. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good






33. A firm that has market power in the factor market (a wage-setter)






34. Models where firms are competitive rivals seeking to gain at the expense of their rivals






35. The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income






36. Ei > 1






37. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient






38. The rational decision maker chooses an action if MB = MC






39. Models where firms agree to mutually improve their situation






40. Entry (or exit) of firms does not shift the cost curves of firms in the industry






41. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax






42. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity






43. Total product divided by labor employed. APL = TPL/L






44. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur






45. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand






46. The mechanism for combining production resources - with existing technology - into finished goods and services






47. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur






48. AVC = TVC/Q






49. The upward part of the LRAC curve where LRAC rises as plant size increases. This is usually the result of the increased difficulty of managing larger firms - which results in lost efficiency and rising per unit costs.






50. Ed = 0 - no response to price change